Last Friday, the U.S. EIA published data showing natural gas storage inventories for this time of year are at their lowest levels since 2005, and well below the 5-year rolling average range. I’ve been seeing a lot of hubbub (EIA even released a nifty gas storage dashboard in early September) about low gas storage levels recently, so let’s see what all the fuss is about?

Gas storage basics

Natural gas is primarily stored in underground, geologic formations (e.g. aquifers, depleted gas fields, salt taverns) or, to a lesser extent, liquefied natural gas (LNG) tanks. Gas is “injected” into storage at times of lower demand (e.g. spring, summer, fall) and withdrawn from storage during periods of high demand (i.e. winter). These stockpiled volumes help bridge the gap between gas consumption and production, when consumers increase gas use in cold weather periods to heat homes and businesses.

Lower than average gas storage levels heading into the peak demand season raise questions about adequacy of supply, and higher prices. And, since gas demand has increased significantly with the rise of U.S. shale development, the economy may be more vulnerable to price volatility.

So, why are storage levels so low?

EIA attributes these low levels to significant withdraws in January 2018 during an extended cold spell, a delay to the start of the injection season as cold temperatures persisted through April 2018, warmer summer temperatures (i.e. increase air conditioning), growth of gas exports, and several other factors. Others note high fall temperatures have increased power sector gas demand to record levels for October, potentially diverting some gas supplies otherwise bound for storage.

In fact, gas storage levels are below five-year average ranges for almost every storage region, except the Mountain region. (see the graphic above)

EIA believes some of the storage inventory decrease may be due to new pipeline capacity coming online, increasing the ability for producers to bring product to market and decreasing reliance on storage. Analysis commissioned by the Natural Gas Supply Association (NGSA) also points to reduced winter storage withdraws per heating degree day, bolstering the notion that the system has become less reliant on storage. (see graphic to the right)

Is this a big concern?

As mentioned, most of the concern about low storage levels relates to rising prices and price volatility, especially as temperatures dip.

NOAA’s winter weather forecast generally indicated the 2018-2019 winter temperatures would be similar to last year’s. NOAA also predicts an El Nino pattern may develop, which may increase the risk of warm or cold extremes in some areas of the country (see this graphic from NOAA). However, extreme cold snaps are unpredictable.

Concern levels may be different for each region of the U.S. For example, areas of the northeast and mid-Atlantic are highly dependent on gas for both space heating and electric power, potentially increasing vulnerability to supply issues and price spikes. For example, gas plants that don’t have firm gas contracts with low-cost supply are particularly vulnerable.

On the other hand, increased coal (and oil) power plant dispatch will occur in cold temperatures, if/when gas prices spike. This is driven by least-cost dispatch principles (i.e. economics), not decreased reliability or resilience of the gas system. However, in today’s politically-charged energy policy landscape, count on such incidents to be followed by calls for coal bailouts.

[summary] =>
[format] => full_html
[safe_value] =>

Last Friday, the U.S. EIA published data showing natural gas storage inventories for this time of year are at their lowest levels since 2005, and well below the 5-year rolling average range. I’ve been seeing a lot of hubbub (EIA even released a nifty gas storage dashboard in early September) about low gas storage levels recently, so let’s see what all the fuss is about?

Gas storage basics

Natural gas is primarily stored in underground, geologic formations (e.g. aquifers, depleted gas fields, salt taverns) or, to a lesser extent, liquefied natural gas (LNG) tanks. Gas is “injected” into storage at times of lower demand (e.g. spring, summer, fall) and withdrawn from storage during periods of high demand (i.e. winter). These stockpiled volumes help bridge the gap between gas consumption and production, when consumers increase gas use in cold weather periods to heat homes and businesses.

Lower than average gas storage levels heading into the peak demand season raise questions about adequacy of supply, and higher prices. And, since gas demand has increased significantly with the rise of U.S. shale development, the economy may be more vulnerable to price volatility.

So, why are storage levels so low?

EIA attributes these low levels to significant withdraws in January 2018 during an extended cold spell, a delay to the start of the injection season as cold temperatures persisted through April 2018, warmer summer temperatures (i.e. increase air conditioning), growth of gas exports, and several other factors. Others note high fall temperatures have increased power sector gas demand to record levels for October, potentially diverting some gas supplies otherwise bound for storage.

In fact, gas storage levels are below five-year average ranges for almost every storage region, except the Mountain region. (see the graphic above)

EIA believes some of the storage inventory decrease may be due to new pipeline capacity coming online, increasing the ability for producers to bring product to market and decreasing reliance on storage. Analysis commissioned by the Natural Gas Supply Association (NGSA) also points to reduced winter storage withdraws per heating degree day, bolstering the notion that the system has become less reliant on storage. (see graphic to the right)

Is this a big concern?

As mentioned, most of the concern about low storage levels relates to rising prices and price volatility, especially as temperatures dip.

NOAA’s winter weather forecast generally indicated the 2018-2019 winter temperatures would be similar to last year’s. NOAA also predicts an El Nino pattern may develop, which may increase the risk of warm or cold extremes in some areas of the country (see this graphic from NOAA). However, extreme cold snaps are unpredictable.

Concern levels may be different for each region of the U.S. For example, areas of the northeast and mid-Atlantic are highly dependent on gas for both space heating and electric power, potentially increasing vulnerability to supply issues and price spikes. For example, gas plants that don’t have firm gas contracts with low-cost supply are particularly vulnerable.

On the other hand, increased coal (and oil) power plant dispatch will occur in cold temperatures, if/when gas prices spike. This is driven by least-cost dispatch principles (i.e. economics), not decreased reliability or resilience of the gas system. However, in today’s politically-charged energy policy landscape, count on such incidents to be followed by calls for coal bailouts.

Christina Simeone is a doctoral student in advanced energy systems at the Colorado School of Mines and the National Renewable Energy Laboratory, a joint program. She is also the former director of policy and external affairs at the Kleinman Center for Energy Policy. While at the Kleinman Center, Christina engaged in applied research—bringing together analytics, academics, and industry insights—to further the center's mission.

Prior to joining the Kleinman Center, Simeone served as the director of the PennFuture Energy Center for Enterprise and the Environment, where she focused on energy and climate issues that impact Pennsylvania. Simeone worked on federal energy and climate legislation as policy director at the Alliance for Climate Protection in Washington, D.C., after spending several years in Harrisburg at the Pennsylvania Department of Environmental Protection (PA DEP), where she worked on climate and energy issues in the Policy Office and as special assistant to the secretary. Additionally, she has experience in private environmental consulting and in the financial management sector.

Simeone holds a master's degree in environmental studies from the University of Pennsylvania, a B.A. in economics from the University of Miami, and B.S. in music industry from Drexel University (with a concentration in opera and piano performance). She is a board member of Philadelphia's Sustainable Energy Fund, former chair of the Climate Change Advisory Committee to the PA DEP, and former co-chair to Governor Wolf's transition team for the PA DEP.

[summary] =>
[format] => full_html
[safe_value] =>

Christina Simeone is a doctoral student in advanced energy systems at the Colorado School of Mines and the National Renewable Energy Laboratory, a joint program. She is also the former director of policy and external affairs at the Kleinman Center for Energy Policy. While at the Kleinman Center, Christina engaged in applied research—bringing together analytics, academics, and industry insights—to further the center's mission.

Prior to joining the Kleinman Center, Simeone served as the director of the PennFuture Energy Center for Enterprise and the Environment, where she focused on energy and climate issues that impact Pennsylvania. Simeone worked on federal energy and climate legislation as policy director at the Alliance for Climate Protection in Washington, D.C., after spending several years in Harrisburg at the Pennsylvania Department of Environmental Protection (PA DEP), where she worked on climate and energy issues in the Policy Office and as special assistant to the secretary. Additionally, she has experience in private environmental consulting and in the financial management sector.

Simeone holds a master's degree in environmental studies from the University of Pennsylvania, a B.A. in economics from the University of Miami, and B.S. in music industry from Drexel University (with a concentration in opera and piano performance). She is a board member of Philadelphia's Sustainable Energy Fund, former chair of the Climate Change Advisory Committee to the PA DEP, and former co-chair to Governor Wolf's transition team for the PA DEP.

is a senior fellow at the Kleinman Center for Energy Policy and a doctoral student in advanced energy systems at the Colorado School of Mines and the National Renewable Energy Laboratory, a joint program.

[format] => full_html
[safe_value] =>

is a senior fellow at the Kleinman Center for Energy Policy and a doctoral student in advanced energy systems at the Colorado School of Mines and the National Renewable Energy Laboratory, a joint program.

Christina Simeone is a doctoral student in advanced energy systems at the Colorado School of Mines and the National Renewable Energy Laboratory, a joint program. She is also the former director of policy and external affairs at the Kleinman Center for Energy Policy. While at the Kleinman Center, Christina engaged in applied research—bringing together analytics, academics, and industry insights—to further the center's mission.

Prior to joining the Kleinman Center, Simeone served as the director of the PennFuture Energy Center for Enterprise and the Environment, where she focused on energy and climate issues that impact Pennsylvania. Simeone worked on federal energy and climate legislation as policy director at the Alliance for Climate Protection in Washington, D.C., after spending several years in Harrisburg at the Pennsylvania Department of Environmental Protection (PA DEP), where she worked on climate and energy issues in the Policy Office and as special assistant to the secretary. Additionally, she has experience in private environmental consulting and in the financial management sector.

Simeone holds a master's degree in environmental studies from the University of Pennsylvania, a B.A. in economics from the University of Miami, and B.S. in music industry from Drexel University (with a concentration in opera and piano performance). She is a board member of Philadelphia's Sustainable Energy Fund, former chair of the Climate Change Advisory Committee to the PA DEP, and former co-chair to Governor Wolf's transition team for the PA DEP.

[summary] =>
[format] => full_html
[safe_value] =>

Christina Simeone is a doctoral student in advanced energy systems at the Colorado School of Mines and the National Renewable Energy Laboratory, a joint program. She is also the former director of policy and external affairs at the Kleinman Center for Energy Policy. While at the Kleinman Center, Christina engaged in applied research—bringing together analytics, academics, and industry insights—to further the center's mission.

Prior to joining the Kleinman Center, Simeone served as the director of the PennFuture Energy Center for Enterprise and the Environment, where she focused on energy and climate issues that impact Pennsylvania. Simeone worked on federal energy and climate legislation as policy director at the Alliance for Climate Protection in Washington, D.C., after spending several years in Harrisburg at the Pennsylvania Department of Environmental Protection (PA DEP), where she worked on climate and energy issues in the Policy Office and as special assistant to the secretary. Additionally, she has experience in private environmental consulting and in the financial management sector.

Simeone holds a master's degree in environmental studies from the University of Pennsylvania, a B.A. in economics from the University of Miami, and B.S. in music industry from Drexel University (with a concentration in opera and piano performance). She is a board member of Philadelphia's Sustainable Energy Fund, former chair of the Climate Change Advisory Committee to the PA DEP, and former co-chair to Governor Wolf's transition team for the PA DEP.

is a senior fellow at the Kleinman Center for Energy Policy and a doctoral student in advanced energy systems at the Colorado School of Mines and the National Renewable Energy Laboratory, a joint program.

[format] => full_html
[safe_value] =>

is a senior fellow at the Kleinman Center for Energy Policy and a doctoral student in advanced energy systems at the Colorado School of Mines and the National Renewable Energy Laboratory, a joint program.

Christina Simeone is a doctoral student in advanced energy systems at the Colorado School of Mines and the National Renewable Energy Laboratory, a joint program. She is also the former director of policy and external affairs at the Kleinman Center for Energy Policy. While at the Kleinman Center, Christina engaged in applied research—bringing together analytics, academics, and industry insights—to further the center's mission.

Prior to joining the Kleinman Center, Simeone served as the director of the PennFuture Energy Center for Enterprise and the Environment, where she focused on energy and climate issues that impact Pennsylvania. Simeone worked on federal energy and climate legislation as policy director at the Alliance for Climate Protection in Washington, D.C., after spending several years in Harrisburg at the Pennsylvania Department of Environmental Protection (PA DEP), where she worked on climate and energy issues in the Policy Office and as special assistant to the secretary. Additionally, she has experience in private environmental consulting and in the financial management sector.

Simeone holds a master's degree in environmental studies from the University of Pennsylvania, a B.A. in economics from the University of Miami, and B.S. in music industry from Drexel University (with a concentration in opera and piano performance). She is a board member of Philadelphia's Sustainable Energy Fund, former chair of the Climate Change Advisory Committee to the PA DEP, and former co-chair to Governor Wolf's transition team for the PA DEP.

[summary] =>
[format] => full_html
[safe_value] =>

Christina Simeone is a doctoral student in advanced energy systems at the Colorado School of Mines and the National Renewable Energy Laboratory, a joint program. She is also the former director of policy and external affairs at the Kleinman Center for Energy Policy. While at the Kleinman Center, Christina engaged in applied research—bringing together analytics, academics, and industry insights—to further the center's mission.

Prior to joining the Kleinman Center, Simeone served as the director of the PennFuture Energy Center for Enterprise and the Environment, where she focused on energy and climate issues that impact Pennsylvania. Simeone worked on federal energy and climate legislation as policy director at the Alliance for Climate Protection in Washington, D.C., after spending several years in Harrisburg at the Pennsylvania Department of Environmental Protection (PA DEP), where she worked on climate and energy issues in the Policy Office and as special assistant to the secretary. Additionally, she has experience in private environmental consulting and in the financial management sector.

Simeone holds a master's degree in environmental studies from the University of Pennsylvania, a B.A. in economics from the University of Miami, and B.S. in music industry from Drexel University (with a concentration in opera and piano performance). She is a board member of Philadelphia's Sustainable Energy Fund, former chair of the Climate Change Advisory Committee to the PA DEP, and former co-chair to Governor Wolf's transition team for the PA DEP.

is a senior fellow at the Kleinman Center for Energy Policy and a doctoral student in advanced energy systems at the Colorado School of Mines and the National Renewable Energy Laboratory, a joint program.

[format] => full_html
[safe_value] =>

is a senior fellow at the Kleinman Center for Energy Policy and a doctoral student in advanced energy systems at the Colorado School of Mines and the National Renewable Energy Laboratory, a joint program.

Christina Simeone is a doctoral student in advanced energy systems at the Colorado School of Mines and the National Renewable Energy Laboratory, a joint program. She is also the former director of policy and external affairs at the Kleinman Center for Energy Policy. While at the Kleinman Center, Christina engaged in applied research—bringing together analytics, academics, and industry insights—to further the center's mission.

Prior to joining the Kleinman Center, Simeone served as the director of the PennFuture Energy Center for Enterprise and the Environment, where she focused on energy and climate issues that impact Pennsylvania. Simeone worked on federal energy and climate legislation as policy director at the Alliance for Climate Protection in Washington, D.C., after spending several years in Harrisburg at the Pennsylvania Department of Environmental Protection (PA DEP), where she worked on climate and energy issues in the Policy Office and as special assistant to the secretary. Additionally, she has experience in private environmental consulting and in the financial management sector.

Simeone holds a master's degree in environmental studies from the University of Pennsylvania, a B.A. in economics from the University of Miami, and B.S. in music industry from Drexel University (with a concentration in opera and piano performance). She is a board member of Philadelphia's Sustainable Energy Fund, former chair of the Climate Change Advisory Committee to the PA DEP, and former co-chair to Governor Wolf's transition team for the PA DEP.

[summary] =>
[format] => full_html
[safe_value] =>

Christina Simeone is a doctoral student in advanced energy systems at the Colorado School of Mines and the National Renewable Energy Laboratory, a joint program. She is also the former director of policy and external affairs at the Kleinman Center for Energy Policy. While at the Kleinman Center, Christina engaged in applied research—bringing together analytics, academics, and industry insights—to further the center's mission.

Prior to joining the Kleinman Center, Simeone served as the director of the PennFuture Energy Center for Enterprise and the Environment, where she focused on energy and climate issues that impact Pennsylvania. Simeone worked on federal energy and climate legislation as policy director at the Alliance for Climate Protection in Washington, D.C., after spending several years in Harrisburg at the Pennsylvania Department of Environmental Protection (PA DEP), where she worked on climate and energy issues in the Policy Office and as special assistant to the secretary. Additionally, she has experience in private environmental consulting and in the financial management sector.

Simeone holds a master's degree in environmental studies from the University of Pennsylvania, a B.A. in economics from the University of Miami, and B.S. in music industry from Drexel University (with a concentration in opera and piano performance). She is a board member of Philadelphia's Sustainable Energy Fund, former chair of the Climate Change Advisory Committee to the PA DEP, and former co-chair to Governor Wolf's transition team for the PA DEP.

is a senior fellow at the Kleinman Center for Energy Policy and a doctoral student in advanced energy systems at the Colorado School of Mines and the National Renewable Energy Laboratory, a joint program.

[format] => full_html
[safe_value] =>

is a senior fellow at the Kleinman Center for Energy Policy and a doctoral student in advanced energy systems at the Colorado School of Mines and the National Renewable Energy Laboratory, a joint program.

Last Friday, the U.S. EIA published data showing natural gas storage inventories for this time of year are at their lowest levels since 2005, and well below the 5-year rolling average range. I’ve been seeing a lot of hubbub (EIA even released a nifty gas storage dashboard in early September) about low gas storage levels recently, so let’s see what all the fuss is about?

Gas storage basics

Natural gas is primarily stored in underground, geologic formations (e.g. aquifers, depleted gas fields, salt taverns) or, to a lesser extent, liquefied natural gas (LNG) tanks. Gas is “injected” into storage at times of lower demand (e.g. spring, summer, fall) and withdrawn from storage during periods of high demand (i.e. winter). These stockpiled volumes help bridge the gap between gas consumption and production, when consumers increase gas use in cold weather periods to heat homes and businesses.

Lower than average gas storage levels heading into the peak demand season raise questions about adequacy of supply, and higher prices. And, since gas demand has increased significantly with the rise of U.S. shale development, the economy may be more vulnerable to price volatility.

So, why are storage levels so low?

EIA attributes these low levels to significant withdraws in January 2018 during an extended cold spell, a delay to the start of the injection season as cold temperatures persisted through April 2018, warmer summer temperatures (i.e. increase air conditioning), growth of gas exports, and several other factors. Others note high fall temperatures have increased power sector gas demand to record levels for October, potentially diverting some gas supplies otherwise bound for storage.

In fact, gas storage levels are below five-year average ranges for almost every storage region, except the Mountain region. (see the graphic above)

EIA believes some of the storage inventory decrease may be due to new pipeline capacity coming online, increasing the ability for producers to bring product to market and decreasing reliance on storage. Analysis commissioned by the Natural Gas Supply Association (NGSA) also points to reduced winter storage withdraws per heating degree day, bolstering the notion that the system has become less reliant on storage. (see graphic to the right)

Is this a big concern?

As mentioned, most of the concern about low storage levels relates to rising prices and price volatility, especially as temperatures dip.

NOAA’s winter weather forecast generally indicated the 2018-2019 winter temperatures would be similar to last year’s. NOAA also predicts an El Nino pattern may develop, which may increase the risk of warm or cold extremes in some areas of the country (see this graphic from NOAA). However, extreme cold snaps are unpredictable.

Concern levels may be different for each region of the U.S. For example, areas of the northeast and mid-Atlantic are highly dependent on gas for both space heating and electric power, potentially increasing vulnerability to supply issues and price spikes. For example, gas plants that don’t have firm gas contracts with low-cost supply are particularly vulnerable.

On the other hand, increased coal (and oil) power plant dispatch will occur in cold temperatures, if/when gas prices spike. This is driven by least-cost dispatch principles (i.e. economics), not decreased reliability or resilience of the gas system. However, in today’s politically-charged energy policy landscape, count on such incidents to be followed by calls for coal bailouts.

[summary] =>
[format] => full_html
[safe_value] =>

Last Friday, the U.S. EIA published data showing natural gas storage inventories for this time of year are at their lowest levels since 2005, and well below the 5-year rolling average range. I’ve been seeing a lot of hubbub (EIA even released a nifty gas storage dashboard in early September) about low gas storage levels recently, so let’s see what all the fuss is about?

Gas storage basics

Natural gas is primarily stored in underground, geologic formations (e.g. aquifers, depleted gas fields, salt taverns) or, to a lesser extent, liquefied natural gas (LNG) tanks. Gas is “injected” into storage at times of lower demand (e.g. spring, summer, fall) and withdrawn from storage during periods of high demand (i.e. winter). These stockpiled volumes help bridge the gap between gas consumption and production, when consumers increase gas use in cold weather periods to heat homes and businesses.

Lower than average gas storage levels heading into the peak demand season raise questions about adequacy of supply, and higher prices. And, since gas demand has increased significantly with the rise of U.S. shale development, the economy may be more vulnerable to price volatility.

So, why are storage levels so low?

EIA attributes these low levels to significant withdraws in January 2018 during an extended cold spell, a delay to the start of the injection season as cold temperatures persisted through April 2018, warmer summer temperatures (i.e. increase air conditioning), growth of gas exports, and several other factors. Others note high fall temperatures have increased power sector gas demand to record levels for October, potentially diverting some gas supplies otherwise bound for storage.

In fact, gas storage levels are below five-year average ranges for almost every storage region, except the Mountain region. (see the graphic above)

EIA believes some of the storage inventory decrease may be due to new pipeline capacity coming online, increasing the ability for producers to bring product to market and decreasing reliance on storage. Analysis commissioned by the Natural Gas Supply Association (NGSA) also points to reduced winter storage withdraws per heating degree day, bolstering the notion that the system has become less reliant on storage. (see graphic to the right)

Is this a big concern?

As mentioned, most of the concern about low storage levels relates to rising prices and price volatility, especially as temperatures dip.

NOAA’s winter weather forecast generally indicated the 2018-2019 winter temperatures would be similar to last year’s. NOAA also predicts an El Nino pattern may develop, which may increase the risk of warm or cold extremes in some areas of the country (see this graphic from NOAA). However, extreme cold snaps are unpredictable.

Concern levels may be different for each region of the U.S. For example, areas of the northeast and mid-Atlantic are highly dependent on gas for both space heating and electric power, potentially increasing vulnerability to supply issues and price spikes. For example, gas plants that don’t have firm gas contracts with low-cost supply are particularly vulnerable.

On the other hand, increased coal (and oil) power plant dispatch will occur in cold temperatures, if/when gas prices spike. This is driven by least-cost dispatch principles (i.e. economics), not decreased reliability or resilience of the gas system. However, in today’s politically-charged energy policy landscape, count on such incidents to be followed by calls for coal bailouts.

Christina Simeone is a doctoral student in advanced energy systems at the Colorado School of Mines and the National Renewable Energy Laboratory, a joint program. She is also the former director of policy and external affairs at the Kleinman Center for Energy Policy. While at the Kleinman Center, Christina engaged in applied research—bringing together analytics, academics, and industry insights—to further the center's mission.

Prior to joining the Kleinman Center, Simeone served as the director of the PennFuture Energy Center for Enterprise and the Environment, where she focused on energy and climate issues that impact Pennsylvania. Simeone worked on federal energy and climate legislation as policy director at the Alliance for Climate Protection in Washington, D.C., after spending several years in Harrisburg at the Pennsylvania Department of Environmental Protection (PA DEP), where she worked on climate and energy issues in the Policy Office and as special assistant to the secretary. Additionally, she has experience in private environmental consulting and in the financial management sector.

Simeone holds a master's degree in environmental studies from the University of Pennsylvania, a B.A. in economics from the University of Miami, and B.S. in music industry from Drexel University (with a concentration in opera and piano performance). She is a board member of Philadelphia's Sustainable Energy Fund, former chair of the Climate Change Advisory Committee to the PA DEP, and former co-chair to Governor Wolf's transition team for the PA DEP.

[summary] =>
[format] => full_html
[safe_value] =>

Christina Simeone is a doctoral student in advanced energy systems at the Colorado School of Mines and the National Renewable Energy Laboratory, a joint program. She is also the former director of policy and external affairs at the Kleinman Center for Energy Policy. While at the Kleinman Center, Christina engaged in applied research—bringing together analytics, academics, and industry insights—to further the center's mission.

Prior to joining the Kleinman Center, Simeone served as the director of the PennFuture Energy Center for Enterprise and the Environment, where she focused on energy and climate issues that impact Pennsylvania. Simeone worked on federal energy and climate legislation as policy director at the Alliance for Climate Protection in Washington, D.C., after spending several years in Harrisburg at the Pennsylvania Department of Environmental Protection (PA DEP), where she worked on climate and energy issues in the Policy Office and as special assistant to the secretary. Additionally, she has experience in private environmental consulting and in the financial management sector.

Simeone holds a master's degree in environmental studies from the University of Pennsylvania, a B.A. in economics from the University of Miami, and B.S. in music industry from Drexel University (with a concentration in opera and piano performance). She is a board member of Philadelphia's Sustainable Energy Fund, former chair of the Climate Change Advisory Committee to the PA DEP, and former co-chair to Governor Wolf's transition team for the PA DEP.

is a senior fellow at the Kleinman Center for Energy Policy and a doctoral student in advanced energy systems at the Colorado School of Mines and the National Renewable Energy Laboratory, a joint program.

[format] => full_html
[safe_value] =>

is a senior fellow at the Kleinman Center for Energy Policy and a doctoral student in advanced energy systems at the Colorado School of Mines and the National Renewable Energy Laboratory, a joint program.

Last Friday, the U.S. EIA published data showing natural gas storage inventories for this time of year are at their lowest levels since 2005, and well below the 5-year rolling average range. I’ve been seeing a lot of hubbub (EIA even released a nifty gas storage dashboard in early September) about low gas storage levels recently, so let’s see what all the fuss is about?

Gas storage basics

Natural gas is primarily stored in underground, geologic formations (e.g. aquifers, depleted gas fields, salt taverns) or, to a lesser extent, liquefied natural gas (LNG) tanks. Gas is “injected” into storage at times of lower demand (e.g. spring, summer, fall) and withdrawn from storage during periods of high demand (i.e. winter). These stockpiled volumes help bridge the gap between gas consumption and production, when consumers increase gas use in cold weather periods to heat homes and businesses.

Lower than average gas storage levels heading into the peak demand season raise questions about adequacy of supply, and higher prices. And, since gas demand has increased significantly with the rise of U.S. shale development, the economy may be more vulnerable to price volatility.

So, why are storage levels so low?

EIA attributes these low levels to significant withdraws in January 2018 during an extended cold spell, a delay to the start of the injection season as cold temperatures persisted through April 2018, warmer summer temperatures (i.e. increase air conditioning), growth of gas exports, and several other factors. Others note high fall temperatures have increased power sector gas demand to record levels for October, potentially diverting some gas supplies otherwise bound for storage.

In fact, gas storage levels are below five-year average ranges for almost every storage region, except the Mountain region. (see the graphic above)

EIA believes some of the storage inventory decrease may be due to new pipeline capacity coming online, increasing the ability for producers to bring product to market and decreasing reliance on storage. Analysis commissioned by the Natural Gas Supply Association (NGSA) also points to reduced winter storage withdraws per heating degree day, bolstering the notion that the system has become less reliant on storage. (see graphic to the right)

Is this a big concern?

As mentioned, most of the concern about low storage levels relates to rising prices and price volatility, especially as temperatures dip.

NOAA’s winter weather forecast generally indicated the 2018-2019 winter temperatures would be similar to last year’s. NOAA also predicts an El Nino pattern may develop, which may increase the risk of warm or cold extremes in some areas of the country (see this graphic from NOAA). However, extreme cold snaps are unpredictable.

Concern levels may be different for each region of the U.S. For example, areas of the northeast and mid-Atlantic are highly dependent on gas for both space heating and electric power, potentially increasing vulnerability to supply issues and price spikes. For example, gas plants that don’t have firm gas contracts with low-cost supply are particularly vulnerable.

On the other hand, increased coal (and oil) power plant dispatch will occur in cold temperatures, if/when gas prices spike. This is driven by least-cost dispatch principles (i.e. economics), not decreased reliability or resilience of the gas system. However, in today’s politically-charged energy policy landscape, count on such incidents to be followed by calls for coal bailouts.

[summary] =>
[format] => full_html
[safe_value] =>

Last Friday, the U.S. EIA published data showing natural gas storage inventories for this time of year are at their lowest levels since 2005, and well below the 5-year rolling average range. I’ve been seeing a lot of hubbub (EIA even released a nifty gas storage dashboard in early September) about low gas storage levels recently, so let’s see what all the fuss is about?

Gas storage basics

Natural gas is primarily stored in underground, geologic formations (e.g. aquifers, depleted gas fields, salt taverns) or, to a lesser extent, liquefied natural gas (LNG) tanks. Gas is “injected” into storage at times of lower demand (e.g. spring, summer, fall) and withdrawn from storage during periods of high demand (i.e. winter). These stockpiled volumes help bridge the gap between gas consumption and production, when consumers increase gas use in cold weather periods to heat homes and businesses.

Lower than average gas storage levels heading into the peak demand season raise questions about adequacy of supply, and higher prices. And, since gas demand has increased significantly with the rise of U.S. shale development, the economy may be more vulnerable to price volatility.

So, why are storage levels so low?

EIA attributes these low levels to significant withdraws in January 2018 during an extended cold spell, a delay to the start of the injection season as cold temperatures persisted through April 2018, warmer summer temperatures (i.e. increase air conditioning), growth of gas exports, and several other factors. Others note high fall temperatures have increased power sector gas demand to record levels for October, potentially diverting some gas supplies otherwise bound for storage.

In fact, gas storage levels are below five-year average ranges for almost every storage region, except the Mountain region. (see the graphic above)

EIA believes some of the storage inventory decrease may be due to new pipeline capacity coming online, increasing the ability for producers to bring product to market and decreasing reliance on storage. Analysis commissioned by the Natural Gas Supply Association (NGSA) also points to reduced winter storage withdraws per heating degree day, bolstering the notion that the system has become less reliant on storage. (see graphic to the right)

Is this a big concern?

As mentioned, most of the concern about low storage levels relates to rising prices and price volatility, especially as temperatures dip.

NOAA’s winter weather forecast generally indicated the 2018-2019 winter temperatures would be similar to last year’s. NOAA also predicts an El Nino pattern may develop, which may increase the risk of warm or cold extremes in some areas of the country (see this graphic from NOAA). However, extreme cold snaps are unpredictable.

Concern levels may be different for each region of the U.S. For example, areas of the northeast and mid-Atlantic are highly dependent on gas for both space heating and electric power, potentially increasing vulnerability to supply issues and price spikes. For example, gas plants that don’t have firm gas contracts with low-cost supply are particularly vulnerable.

On the other hand, increased coal (and oil) power plant dispatch will occur in cold temperatures, if/when gas prices spike. This is driven by least-cost dispatch principles (i.e. economics), not decreased reliability or resilience of the gas system. However, in today’s politically-charged energy policy landscape, count on such incidents to be followed by calls for coal bailouts.

Christina Simeone is a doctoral student in advanced energy systems at the Colorado School of Mines and the National Renewable Energy Laboratory, a joint program. She is also the former director of policy and external affairs at the Kleinman Center for Energy Policy. While at the Kleinman Center, Christina engaged in applied research—bringing together analytics, academics, and industry insights—to further the center's mission.

Prior to joining the Kleinman Center, Simeone served as the director of the PennFuture Energy Center for Enterprise and the Environment, where she focused on energy and climate issues that impact Pennsylvania. Simeone worked on federal energy and climate legislation as policy director at the Alliance for Climate Protection in Washington, D.C., after spending several years in Harrisburg at the Pennsylvania Department of Environmental Protection (PA DEP), where she worked on climate and energy issues in the Policy Office and as special assistant to the secretary. Additionally, she has experience in private environmental consulting and in the financial management sector.

Simeone holds a master's degree in environmental studies from the University of Pennsylvania, a B.A. in economics from the University of Miami, and B.S. in music industry from Drexel University (with a concentration in opera and piano performance). She is a board member of Philadelphia's Sustainable Energy Fund, former chair of the Climate Change Advisory Committee to the PA DEP, and former co-chair to Governor Wolf's transition team for the PA DEP.

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Christina Simeone is a doctoral student in advanced energy systems at the Colorado School of Mines and the National Renewable Energy Laboratory, a joint program. She is also the former director of policy and external affairs at the Kleinman Center for Energy Policy. While at the Kleinman Center, Christina engaged in applied research—bringing together analytics, academics, and industry insights—to further the center's mission.

Prior to joining the Kleinman Center, Simeone served as the director of the PennFuture Energy Center for Enterprise and the Environment, where she focused on energy and climate issues that impact Pennsylvania. Simeone worked on federal energy and climate legislation as policy director at the Alliance for Climate Protection in Washington, D.C., after spending several years in Harrisburg at the Pennsylvania Department of Environmental Protection (PA DEP), where she worked on climate and energy issues in the Policy Office and as special assistant to the secretary. Additionally, she has experience in private environmental consulting and in the financial management sector.

Simeone holds a master's degree in environmental studies from the University of Pennsylvania, a B.A. in economics from the University of Miami, and B.S. in music industry from Drexel University (with a concentration in opera and piano performance). She is a board member of Philadelphia's Sustainable Energy Fund, former chair of the Climate Change Advisory Committee to the PA DEP, and former co-chair to Governor Wolf's transition team for the PA DEP.

is a senior fellow at the Kleinman Center for Energy Policy and a doctoral student in advanced energy systems at the Colorado School of Mines and the National Renewable Energy Laboratory, a joint program.

[format] => full_html
[safe_value] =>

is a senior fellow at the Kleinman Center for Energy Policy and a doctoral student in advanced energy systems at the Colorado School of Mines and the National Renewable Energy Laboratory, a joint program.

Last Friday, the U.S. EIA published data showing natural gas storage inventories for this time of year are at their lowest levels since 2005, and well below the 5-year rolling average range. I’ve been seeing a lot of hubbub (EIA even released a nifty gas storage dashboard in early September) about low gas storage levels recently, so let’s see what all the fuss is about?

Gas storage basics

Natural gas is primarily stored in underground, geologic formations (e.g. aquifers, depleted gas fields, salt taverns) or, to a lesser extent, liquefied natural gas (LNG) tanks. Gas is “injected” into storage at times of lower demand (e.g. spring, summer, fall) and withdrawn from storage during periods of high demand (i.e. winter). These stockpiled volumes help bridge the gap between gas consumption and production, when consumers increase gas use in cold weather periods to heat homes and businesses.

Lower than average gas storage levels heading into the peak demand season raise questions about adequacy of supply, and higher prices. And, since gas demand has increased significantly with the rise of U.S. shale development, the economy may be more vulnerable to price volatility.

So, why are storage levels so low?

EIA attributes these low levels to significant withdraws in January 2018 during an extended cold spell, a delay to the start of the injection season as cold temperatures persisted through April 2018, warmer summer temperatures (i.e. increase air conditioning), growth of gas exports, and several other factors. Others note high fall temperatures have increased power sector gas demand to record levels for October, potentially diverting some gas supplies otherwise bound for storage.

In fact, gas storage levels are below five-year average ranges for almost every storage region, except the Mountain region. (see the graphic above)

EIA believes some of the storage inventory decrease may be due to new pipeline capacity coming online, increasing the ability for producers to bring product to market and decreasing reliance on storage. Analysis commissioned by the Natural Gas Supply Association (NGSA) also points to reduced winter storage withdraws per heating degree day, bolstering the notion that the system has become less reliant on storage. (see graphic to the right)

Is this a big concern?

As mentioned, most of the concern about low storage levels relates to rising prices and price volatility, especially as temperatures dip.

NOAA’s winter weather forecast generally indicated the 2018-2019 winter temperatures would be similar to last year’s. NOAA also predicts an El Nino pattern may develop, which may increase the risk of warm or cold extremes in some areas of the country (see this graphic from NOAA). However, extreme cold snaps are unpredictable.

Concern levels may be different for each region of the U.S. For example, areas of the northeast and mid-Atlantic are highly dependent on gas for both space heating and electric power, potentially increasing vulnerability to supply issues and price spikes. For example, gas plants that don’t have firm gas contracts with low-cost supply are particularly vulnerable.

On the other hand, increased coal (and oil) power plant dispatch will occur in cold temperatures, if/when gas prices spike. This is driven by least-cost dispatch principles (i.e. economics), not decreased reliability or resilience of the gas system. However, in today’s politically-charged energy policy landscape, count on such incidents to be followed by calls for coal bailouts.

[summary] =>
[format] => full_html
[safe_value] =>

Last Friday, the U.S. EIA published data showing natural gas storage inventories for this time of year are at their lowest levels since 2005, and well below the 5-year rolling average range. I’ve been seeing a lot of hubbub (EIA even released a nifty gas storage dashboard in early September) about low gas storage levels recently, so let’s see what all the fuss is about?

Gas storage basics

Natural gas is primarily stored in underground, geologic formations (e.g. aquifers, depleted gas fields, salt taverns) or, to a lesser extent, liquefied natural gas (LNG) tanks. Gas is “injected” into storage at times of lower demand (e.g. spring, summer, fall) and withdrawn from storage during periods of high demand (i.e. winter). These stockpiled volumes help bridge the gap between gas consumption and production, when consumers increase gas use in cold weather periods to heat homes and businesses.

Lower than average gas storage levels heading into the peak demand season raise questions about adequacy of supply, and higher prices. And, since gas demand has increased significantly with the rise of U.S. shale development, the economy may be more vulnerable to price volatility.

So, why are storage levels so low?

EIA attributes these low levels to significant withdraws in January 2018 during an extended cold spell, a delay to the start of the injection season as cold temperatures persisted through April 2018, warmer summer temperatures (i.e. increase air conditioning), growth of gas exports, and several other factors. Others note high fall temperatures have increased power sector gas demand to record levels for October, potentially diverting some gas supplies otherwise bound for storage.

In fact, gas storage levels are below five-year average ranges for almost every storage region, except the Mountain region. (see the graphic above)

EIA believes some of the storage inventory decrease may be due to new pipeline capacity coming online, increasing the ability for producers to bring product to market and decreasing reliance on storage. Analysis commissioned by the Natural Gas Supply Association (NGSA) also points to reduced winter storage withdraws per heating degree day, bolstering the notion that the system has become less reliant on storage. (see graphic to the right)

Is this a big concern?

As mentioned, most of the concern about low storage levels relates to rising prices and price volatility, especially as temperatures dip.

NOAA’s winter weather forecast generally indicated the 2018-2019 winter temperatures would be similar to last year’s. NOAA also predicts an El Nino pattern may develop, which may increase the risk of warm or cold extremes in some areas of the country (see this graphic from NOAA). However, extreme cold snaps are unpredictable.

Concern levels may be different for each region of the U.S. For example, areas of the northeast and mid-Atlantic are highly dependent on gas for both space heating and electric power, potentially increasing vulnerability to supply issues and price spikes. For example, gas plants that don’t have firm gas contracts with low-cost supply are particularly vulnerable.

On the other hand, increased coal (and oil) power plant dispatch will occur in cold temperatures, if/when gas prices spike. This is driven by least-cost dispatch principles (i.e. economics), not decreased reliability or resilience of the gas system. However, in today’s politically-charged energy policy landscape, count on such incidents to be followed by calls for coal bailouts.

Christina Simeone is a doctoral student in advanced energy systems at the Colorado School of Mines and the National Renewable Energy Laboratory, a joint program. She is also the former director of policy and external affairs at the Kleinman Center for Energy Policy. While at the Kleinman Center, Christina engaged in applied research—bringing together analytics, academics, and industry insights—to further the center's mission.

Prior to joining the Kleinman Center, Simeone served as the director of the PennFuture Energy Center for Enterprise and the Environment, where she focused on energy and climate issues that impact Pennsylvania. Simeone worked on federal energy and climate legislation as policy director at the Alliance for Climate Protection in Washington, D.C., after spending several years in Harrisburg at the Pennsylvania Department of Environmental Protection (PA DEP), where she worked on climate and energy issues in the Policy Office and as special assistant to the secretary. Additionally, she has experience in private environmental consulting and in the financial management sector.

Simeone holds a master's degree in environmental studies from the University of Pennsylvania, a B.A. in economics from the University of Miami, and B.S. in music industry from Drexel University (with a concentration in opera and piano performance). She is a board member of Philadelphia's Sustainable Energy Fund, former chair of the Climate Change Advisory Committee to the PA DEP, and former co-chair to Governor Wolf's transition team for the PA DEP.

[summary] =>
[format] => full_html
[safe_value] =>

Christina Simeone is a doctoral student in advanced energy systems at the Colorado School of Mines and the National Renewable Energy Laboratory, a joint program. She is also the former director of policy and external affairs at the Kleinman Center for Energy Policy. While at the Kleinman Center, Christina engaged in applied research—bringing together analytics, academics, and industry insights—to further the center's mission.

Prior to joining the Kleinman Center, Simeone served as the director of the PennFuture Energy Center for Enterprise and the Environment, where she focused on energy and climate issues that impact Pennsylvania. Simeone worked on federal energy and climate legislation as policy director at the Alliance for Climate Protection in Washington, D.C., after spending several years in Harrisburg at the Pennsylvania Department of Environmental Protection (PA DEP), where she worked on climate and energy issues in the Policy Office and as special assistant to the secretary. Additionally, she has experience in private environmental consulting and in the financial management sector.

Simeone holds a master's degree in environmental studies from the University of Pennsylvania, a B.A. in economics from the University of Miami, and B.S. in music industry from Drexel University (with a concentration in opera and piano performance). She is a board member of Philadelphia's Sustainable Energy Fund, former chair of the Climate Change Advisory Committee to the PA DEP, and former co-chair to Governor Wolf's transition team for the PA DEP.

is a senior fellow at the Kleinman Center for Energy Policy and a doctoral student in advanced energy systems at the Colorado School of Mines and the National Renewable Energy Laboratory, a joint program.

[format] => full_html
[safe_value] =>

is a senior fellow at the Kleinman Center for Energy Policy and a doctoral student in advanced energy systems at the Colorado School of Mines and the National Renewable Energy Laboratory, a joint program.

Last Friday, the U.S. EIA published data showing natural gas storage inventories for this time of year are at their lowest levels since 2005, and well below the 5-year rolling average range. I’ve been seeing a lot of hubbub (EIA even released a nifty gas storage dashboard in early September) about low gas storage levels recently, so let’s see what all the fuss is about?

Gas storage basics

Natural gas is primarily stored in underground, geologic formations (e.g. aquifers, depleted gas fields, salt taverns) or, to a lesser extent, liquefied natural gas (LNG) tanks. Gas is “injected” into storage at times of lower demand (e.g. spring, summer, fall) and withdrawn from storage during periods of high demand (i.e. winter). These stockpiled volumes help bridge the gap between gas consumption and production, when consumers increase gas use in cold weather periods to heat homes and businesses.

Lower than average gas storage levels heading into the peak demand season raise questions about adequacy of supply, and higher prices. And, since gas demand has increased significantly with the rise of U.S. shale development, the economy may be more vulnerable to price volatility.

So, why are storage levels so low?

EIA attributes these low levels to significant withdraws in January 2018 during an extended cold spell, a delay to the start of the injection season as cold temperatures persisted through April 2018, warmer summer temperatures (i.e. increase air conditioning), growth of gas exports, and several other factors. Others note high fall temperatures have increased power sector gas demand to record levels for October, potentially diverting some gas supplies otherwise bound for storage.

In fact, gas storage levels are below five-year average ranges for almost every storage region, except the Mountain region. (see the graphic above)

EIA believes some of the storage inventory decrease may be due to new pipeline capacity coming online, increasing the ability for producers to bring product to market and decreasing reliance on storage. Analysis commissioned by the Natural Gas Supply Association (NGSA) also points to reduced winter storage withdraws per heating degree day, bolstering the notion that the system has become less reliant on storage. (see graphic to the right)

Is this a big concern?

As mentioned, most of the concern about low storage levels relates to rising prices and price volatility, especially as temperatures dip.

NOAA’s winter weather forecast generally indicated the 2018-2019 winter temperatures would be similar to last year’s. NOAA also predicts an El Nino pattern may develop, which may increase the risk of warm or cold extremes in some areas of the country (see this graphic from NOAA). However, extreme cold snaps are unpredictable.

Concern levels may be different for each region of the U.S. For example, areas of the northeast and mid-Atlantic are highly dependent on gas for both space heating and electric power, potentially increasing vulnerability to supply issues and price spikes. For example, gas plants that don’t have firm gas contracts with low-cost supply are particularly vulnerable.

On the other hand, increased coal (and oil) power plant dispatch will occur in cold temperatures, if/when gas prices spike. This is driven by least-cost dispatch principles (i.e. economics), not decreased reliability or resilience of the gas system. However, in today’s politically-charged energy policy landscape, count on such incidents to be followed by calls for coal bailouts.

[summary] =>
[format] => full_html
[safe_value] =>

Last Friday, the U.S. EIA published data showing natural gas storage inventories for this time of year are at their lowest levels since 2005, and well below the 5-year rolling average range. I’ve been seeing a lot of hubbub (EIA even released a nifty gas storage dashboard in early September) about low gas storage levels recently, so let’s see what all the fuss is about?

Gas storage basics

Natural gas is primarily stored in underground, geologic formations (e.g. aquifers, depleted gas fields, salt taverns) or, to a lesser extent, liquefied natural gas (LNG) tanks. Gas is “injected” into storage at times of lower demand (e.g. spring, summer, fall) and withdrawn from storage during periods of high demand (i.e. winter). These stockpiled volumes help bridge the gap between gas consumption and production, when consumers increase gas use in cold weather periods to heat homes and businesses.

Lower than average gas storage levels heading into the peak demand season raise questions about adequacy of supply, and higher prices. And, since gas demand has increased significantly with the rise of U.S. shale development, the economy may be more vulnerable to price volatility.

So, why are storage levels so low?

EIA attributes these low levels to significant withdraws in January 2018 during an extended cold spell, a delay to the start of the injection season as cold temperatures persisted through April 2018, warmer summer temperatures (i.e. increase air conditioning), growth of gas exports, and several other factors. Others note high fall temperatures have increased power sector gas demand to record levels for October, potentially diverting some gas supplies otherwise bound for storage.

In fact, gas storage levels are below five-year average ranges for almost every storage region, except the Mountain region. (see the graphic above)

EIA believes some of the storage inventory decrease may be due to new pipeline capacity coming online, increasing the ability for producers to bring product to market and decreasing reliance on storage. Analysis commissioned by the Natural Gas Supply Association (NGSA) also points to reduced winter storage withdraws per heating degree day, bolstering the notion that the system has become less reliant on storage. (see graphic to the right)

Is this a big concern?

As mentioned, most of the concern about low storage levels relates to rising prices and price volatility, especially as temperatures dip.

NOAA’s winter weather forecast generally indicated the 2018-2019 winter temperatures would be similar to last year’s. NOAA also predicts an El Nino pattern may develop, which may increase the risk of warm or cold extremes in some areas of the country (see this graphic from NOAA). However, extreme cold snaps are unpredictable.

Concern levels may be different for each region of the U.S. For example, areas of the northeast and mid-Atlantic are highly dependent on gas for both space heating and electric power, potentially increasing vulnerability to supply issues and price spikes. For example, gas plants that don’t have firm gas contracts with low-cost supply are particularly vulnerable.

On the other hand, increased coal (and oil) power plant dispatch will occur in cold temperatures, if/when gas prices spike. This is driven by least-cost dispatch principles (i.e. economics), not decreased reliability or resilience of the gas system. However, in today’s politically-charged energy policy landscape, count on such incidents to be followed by calls for coal bailouts.

Last Friday, the U.S. EIA published data showing natural gas storage inventories for this time of year are at their lowest levels since 2005, and well below the 5-year rolling average range. I’ve been seeing a lot of hubbub (EIA even released a nifty gas storage dashboard in early September) about low gas storage levels recently, so let’s see what all the fuss is about?

Gas storage basics

Natural gas is primarily stored in underground, geologic formations (e.g. aquifers, depleted gas fields, salt taverns) or, to a lesser extent, liquefied natural gas (LNG) tanks. Gas is “injected” into storage at times of lower demand (e.g. spring, summer, fall) and withdrawn from storage during periods of high demand (i.e. winter). These stockpiled volumes help bridge the gap between gas consumption and production, when consumers increase gas use in cold weather periods to heat homes and businesses.

Lower than average gas storage levels heading into the peak demand season raise questions about adequacy of supply, and higher prices. And, since gas demand has increased significantly with the rise of U.S. shale development, the economy may be more vulnerable to price volatility.

So, why are storage levels so low?

EIA attributes these low levels to significant withdraws in January 2018 during an extended cold spell, a delay to the start of the injection season as cold temperatures persisted through April 2018, warmer summer temperatures (i.e. increase air conditioning), growth of gas exports, and several other factors. Others note high fall temperatures have increased power sector gas demand to record levels for October, potentially diverting some gas supplies otherwise bound for storage.

In fact, gas storage levels are below five-year average ranges for almost every storage region, except the Mountain region. (see the graphic above)

EIA believes some of the storage inventory decrease may be due to new pipeline capacity coming online, increasing the ability for producers to bring product to market and decreasing reliance on storage. Analysis commissioned by the Natural Gas Supply Association (NGSA) also points to reduced winter storage withdraws per heating degree day, bolstering the notion that the system has become less reliant on storage. (see graphic to the right)

Is this a big concern?

As mentioned, most of the concern about low storage levels relates to rising prices and price volatility, especially as temperatures dip.

NOAA’s winter weather forecast generally indicated the 2018-2019 winter temperatures would be similar to last year’s. NOAA also predicts an El Nino pattern may develop, which may increase the risk of warm or cold extremes in some areas of the country (see this graphic from NOAA). However, extreme cold snaps are unpredictable.

Concern levels may be different for each region of the U.S. For example, areas of the northeast and mid-Atlantic are highly dependent on gas for both space heating and electric power, potentially increasing vulnerability to supply issues and price spikes. For example, gas plants that don’t have firm gas contracts with low-cost supply are particularly vulnerable.

On the other hand, increased coal (and oil) power plant dispatch will occur in cold temperatures, if/when gas prices spike. This is driven by least-cost dispatch principles (i.e. economics), not decreased reliability or resilience of the gas system. However, in today’s politically-charged energy policy landscape, count on such incidents to be followed by calls for coal bailouts.

Last Friday, the U.S. EIA published data showing natural gas storage inventories for this time of year are at their lowest levels since 2005, and well below the 5-year rolling average range. I’ve been seeing a lot of hubbub (EIA even released a nifty gas storage dashboard in early September) about low gas storage levels recently, so let’s see what all the fuss is about?

Gas storage basics

Natural gas is primarily stored in underground, geologic formations (e.g. aquifers, depleted gas fields, salt taverns) or, to a lesser extent, liquefied natural gas (LNG) tanks. Gas is “injected” into storage at times of lower demand (e.g. spring, summer, fall) and withdrawn from storage during periods of high demand (i.e. winter). These stockpiled volumes help bridge the gap between gas consumption and production, when consumers increase gas use in cold weather periods to heat homes and businesses.

Lower than average gas storage levels heading into the peak demand season raise questions about adequacy of supply, and higher prices. And, since gas demand has increased significantly with the rise of U.S. shale development, the economy may be more vulnerable to price volatility.

So, why are storage levels so low?

EIA attributes these low levels to significant withdraws in January 2018 during an extended cold spell, a delay to the start of the injection season as cold temperatures persisted through April 2018, warmer summer temperatures (i.e. increase air conditioning), growth of gas exports, and several other factors. Others note high fall temperatures have increased power sector gas demand to record levels for October, potentially diverting some gas supplies otherwise bound for storage.

In fact, gas storage levels are below five-year average ranges for almost every storage region, except the Mountain region. (see the graphic above)

EIA believes some of the storage inventory decrease may be due to new pipeline capacity coming online, increasing the ability for producers to bring product to market and decreasing reliance on storage. Analysis commissioned by the Natural Gas Supply Association (NGSA) also points to reduced winter storage withdraws per heating degree day, bolstering the notion that the system has become less reliant on storage. (see graphic to the right)

Is this a big concern?

As mentioned, most of the concern about low storage levels relates to rising prices and price volatility, especially as temperatures dip.

NOAA’s winter weather forecast generally indicated the 2018-2019 winter temperatures would be similar to last year’s. NOAA also predicts an El Nino pattern may develop, which may increase the risk of warm or cold extremes in some areas of the country (see this graphic from NOAA). However, extreme cold snaps are unpredictable.

Concern levels may be different for each region of the U.S. For example, areas of the northeast and mid-Atlantic are highly dependent on gas for both space heating and electric power, potentially increasing vulnerability to supply issues and price spikes. For example, gas plants that don’t have firm gas contracts with low-cost supply are particularly vulnerable.

On the other hand, increased coal (and oil) power plant dispatch will occur in cold temperatures, if/when gas prices spike. This is driven by least-cost dispatch principles (i.e. economics), not decreased reliability or resilience of the gas system. However, in today’s politically-charged energy policy landscape, count on such incidents to be followed by calls for coal bailouts.

Christina Simeone is a senior fellow at the Kleinman Center for Energy Policy and a doctoral student in advanced energy systems at the Colorado School of Mines and the National Renewable Energy Laboratory, a joint program.

Our blog highlights the research, opinions, and insights of individual authors. It does not represent the voice of the Kleinman Center.